State Bank Corp. Third Quarter Earnings Increase 8% From the Second Quarter and 26% Year-Over-Year to $2.31 million, or $0.29 per Diluted Share, Highlighted by Strong Loan Growth

LAKE HAVASU CITY, Ariz., Oct. 26, 2018 (GLOBE NEWSWIRE) — State Bank Corp. (OTCPINK: SBAZ) (“Company”), the holding company for State Bank of Arizona (“Bank”), today announced net income increased 8.2% to $2.31 million, or $0.29 per diluted share, for the third quarter ended September 30, 2018, compared to $2.13 million, or $0.26 per diluted share, in the second quarter of 2018, and increased 25.5% compared to $1.84 million, or $0.23 per diluted share, for the third quarter of 2017.

For the first nine months of 2018, net income grew 32.5% to $6.30 million, or $0.78 per diluted share, compared to $4.75 million, or $0.59 per diluted share, for the same period of 2017.

“Solid revenue growth combined with improving operating efficiencies contributed to the most profitable periods since the company was founded for both the third quarter and first nine months of 2018,” stated Brian M. Riley, President and Chief Executive Officer. “We generated double digit loan growth year-over-year, in part to the success of our Phoenix loan production office, which opened in the Camelback/Biltmore area earlier this year. We see significant opportunities for expansion in the greater Phoenix market and other markets throughout the state, as the banking landscape is changing, with fewer community banks and larger banks closing offices. Strong economic conditions persist in the Arizona markets we serve, and we see ample opportunity for the continued profitable growth of our franchise.”

Third Quarter 2018 Financial Highlights:

Announced plans to rename the Bank “State Bank of Arizona” to further the strategic objective of expanding state wide.

Net income increased 8.2% to $2.31 million, or $0.29 per diluted share, compared to $2.13 million, or $0.26 per diluted share, in 2Q18.

Return on average assets improved to 1.44%.

Return on average equity improved to 15.19%.

Efficiency ratio was 59.31%.

Non-performing asset ratio decreased to 0.14% with the resolution of one large credit relationship.

Core deposits comprised 90.1% of total deposits.

Net interest margin improved to 4.12% in the third quarter 2018 compared to 3.93% in the preceding quarter and 3.99% in the third quarter a year ago. The increased margin was the result of the recognition of interest income from the resolution of a large nonaccrual loan relationship.

The provision for loan losses was $160,000 during the third quarter of 2018, with net charge-offs of $71,000. The allowance for loan losses totaled $3.7 million at September 30, 2018, or 0.97% of total loans. Excluding acquired loans, the reserve ratio was 1.08%, which is in line with industry peers. On the acquired portfolio, the credit component of the loan purchase discount remains greater than an imputed reserve.

Total assets were $643.0 million at September 30, 2018, an increase of $22.4 million, or 3.60%, from $620.6 million at December 31, 2017, and an increase of $10.9 million, or 1.72%, compared to $632.1 million a year ago. Total loans held for investment were $384.2 million at September 30, 2018, an increase of $36.3 million, or 10.4%, from $347.9 million at December 31, 2017, and an increase of $39.0 million, or 11.3%, compared to $345.2 million a year ago.

Total deposits were $560.9 million, an increase of $11.5 million, or 2.09%, from $549.4 million at December 31, 2017, and a decrease of $0.1 million, or 0.02%, compared to $561.1 million a year ago. Core deposits, defined as noninterest bearing demand, money market, NOW and savings accounts, increased 3.83% compared to nine months earlier and increased 1.79% compared to a year earlier to $505.4 million at September 30, 2018. Core deposits now comprise 90.1% of total deposits.

Nonperforming assets were $923,000 at September 30, 2018, an 86.6% decrease from $6.9 million at December 31, 2017. Nonperforming assets represented 0.14% of total assets at September 30, 2018.

Shareholder equity increased to $61.0 million at September 30, 2018, from $58.7 million at December 31, 2017, and compared to $58.2 million a year ago. At September 30, 2018, tangible book value per share was $6.67 per share compared to $6.37 per share at December 31, 2017, and $6.31 per share at September 30, 2017.

Capital Management

Community banking organizations, including State Bank Corp. and State Bank of Arizona, became subject to increased capital requirements on January 1, 2015, and certain provisions of the new rules will be phased in from 2015 through 2019. The Company’s consolidated capital ratios and the Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III and Dodd Frank Wall Street Reform requirements at September 30, 2018. The Bank reported the following capital ratios at September 30, 2018:

Common Equity Tier 1 Capital Ratio

13.49%

Tier 1 Leverage Ratio

10.23%

Tier 1 Capital Ratio

13.49%

Total Capital Ratio

14.26%

About the Company

State Bank Corp., headquartered in Lake Havasu City, Arizona, is the parent company of State Bank of Arizona, the largest locally-owned bank in Arizona. State Bank of Arizona is a full-service bank providing deposit and loan products, and convenient on-line banking to individuals, businesses and professionals. The Bank was established in October 1991, and the holding company was formed in 2004. Specializing in providing exceptional customer service and investing in its local communities, State Bank of Arizona was named 2018 Bank of the Year by Western Independent Bankers. The Bank has nine full-service branches: two in Lake Havasu City, two in Kingman, two in Prescott, one in Bullhead City, one in Prescott Valley, and one in Cottonwood, Arizona. The Bank also operates loan production offices in Sedona and Phoenix, AZ. The Company is traded over-the-counter as SBAZ. For further information, please visit the web site: www.statebankaz.com

Forward-looking Statements

This press release may include forward-looking statements about State Bank Corp. and State Bank of Arizona. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: the expected cost savings, synergies and other financial benefits from the completed merger might not be realized within the expected time frames or at all. Annualized, pro forma, projected and estimated numbers in this press release are used for illustrative purposes only, are not forecasts and may not reflect actual results. All forward-looking statements included in this press release are based on information available at the time of the release, and State Bank Corp. and State Bank of Arizona assume no obligation to update any forward-looking statements.